In the 1956 case, Securities and Exchange Commission v. Louisiana Public Service Commission et al., the U.S. Supreme Court ruled in favor of the federal government's power to regulate interstate commerce over state rights. The dispute arose when Gulf States Utilities Company sought approval from both its home state regulator, Louisiana Public Service Commission (LPSC), and the Securities and Exchange Commission (SEC) for a proposed stock issue. While LPSC approved it, SEC did not due to concerns about potential harm to investors resulting from an excessive debt-equity ratio if GSU issued more preferred stocks as planned. When taken to court, LPSC argued that they had jurisdiction over this matter since GSU was incorporated in Louisiana. However, Justice Frankfurter writing for majority held that under Section 20(a) of Public Utility Holding Company Act of 1935 (PUHCA), SEC has authority over such transactions involving public utility holding companies even though they are intrastate corporations because these transactions could affect interstate commerce or interests of security holders who may be out-of-state residents; thus affirming supremacy clause & Commerce Clause principles.

In the dissenting opinion for SECURITIES AND EXCHANGE COMMISSION v. LOUISIANA PUBLIC SERVICE COMMISSION et al., Justice Frankfurter, joined by Justices Burton and Minton, argued that the majority's decision to allow federal regulation of securities transactions involving public utilities intruded on state authority over local utility rates. They contended that this was a matter traditionally left to states' discretion under their police powers. The dissenters believed that Congress did not intend for the Public Utility Holding Company Act (PUHCA) of 1935 to interfere with state rate-making processes when it passed the law. Instead, they saw PUHCA as aimed at preventing abuses in interstate commerce and protecting investors from fraudulent practices - objectives which do not necessitate overriding states' control over local utility rates. Thus, they disagreed with the majority's interpretation of congressional intent behind PUHCA and its application in this case.